Correlation Between Take Two and Games Workshop

Can any of the company-specific risk be diversified away by investing in both Take Two and Games Workshop at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Take Two and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Take Two Interactive Software and Games Workshop Group, you can compare the effects of market volatilities on Take Two and Games Workshop and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Take Two with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Games Workshop.

Diversification Opportunities for Take Two and Games Workshop

0.41

Correlation Coefficient

Take Two  Games Workshop

Very weak diversification

The 3 months correlation between Take and Games is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Games Workshop Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Games Workshop Group and Take Two is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Take Two Interactive Software are associated (or correlated) with Games Workshop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Games Workshop Group has no effect on the direction of Take Two i.e., Take Two and Games Workshop go up and down completely randomly.

Pair Corralation between Take Two and Games Workshop

Given the investment horizon of 90 days Take Two Interactive Software is expected to generate 0.94 times more return on investment than Games Workshop. However, Take Two Interactive Software is 1.07 times less risky than Games Workshop. It trades about 0.11 of its potential returns per unit of risk. Games Workshop Group is currently generating about 0.08 per unit of risk. If you would invest  18,197  in Take Two Interactive Software on December 20, 2024 and sell it today you would earn a total of  2,689  from holding Take Two Interactive Software or generate 14.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	86.44%
Values	Daily Returns

Take Two Interactive Software  vs.  Games Workshop Group

Take Two Interactive

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Take Two displayed solid returns over the last few months and may actually be approaching a breakup point.

Games Workshop Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal forward-looking signals, Games Workshop may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Take Two and Games Workshop

The main advantage of trading using opposite Take Two and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Games Workshop can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Games Workshop will offset losses from the drop in Games Workshop's long position.

The idea behind Take Two Interactive Software and Games Workshop Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.